Integrated pest management calls for new biocontrol solutions in management of forest diseases. Endophytic fungi that are commonly found in tree tissue may have potential in biocontrol. However, the links between endophyte status and disease tolerance are still unclear, and we know little about the mechanisms by which the endophytes can influence tree pathogens. The first goal of the thesis was to compare the endophyte status in elm (Ulmus spp.) trees with low vs. high susceptibility to Dutch elm disease (DED), caused by Ophiostoma fungi, and to find correlations between endophytes and the susceptibility pattern of the trees. The second goal was to investigate the potential mechanisms of antagonism by the endophytes towards the pathogen. Thus, endophytes were isolated from leaves, bark and xylem of elms that differed in DED susceptibility. The isolates were screened for their potential to counteract the pathogen in dual cultures. Selected strains were investigated using Phenotype MicroArrays to obtain the substrate utilization profiles that reflect the endophytes’ ability to compete with the pathogen for a nutritional niche. To test for a protective effect against the disease, promising isolates were injected into young elms. Preliminary analyses were done to identify the extracellular chemicals that some of the endophytes released into the growth medium. The results showed that the frequency and diversity of endophytes was higher in xylem of elms with high susceptibility to DED. Some endophytes deadlocked the pathogen with extracellular chemicals in vitro, while others had a faster growth rate. Several endophytes were able to utilize substrates more effectively than the pathogen. A preventive treatment with endophytes protected elms against DED, but the effect was unstable across years. Bioactive fungal extracts had a complex chemical profile, and the individual compounds in the extracts remain to be identified. Because endophytes antagonized the pathogen through different mechanisms, I suggest that an endophytebased biocontrol of DED could be best achieved through a synergistic effect of several endophyte strains